Hong Kong may become new showcase for China Mobile

China Mobile's plan to acquire chunks of existing 3G mobile spectrum in Hong Kong may be part of a bigger goal to make the city a new showcase for the world's largest wireless network operator, according to an industry expert.

The Beijing-based company, which had 720.4 million subscribers at the end of February, has expressed support for the Hong Kong government's proposed strategy to seize and auction off a third of each of the 3G spectrum allocation used by the city's four leading mobile network operators.

The mainland firm has also indicated its intention to bid for that reassigned spectrum.

Peter Koo, a partner at professional services firm Deloitte China, said the mobile network giant appeared keen to hone its expertise and further raise its profile in the telecommunications industry by boosting its competitiveness in Hong Kong.

"This is a smart move," said Koo, who leads Deloitte China's security, privacy and resilience practice.

"Hong Kong is a small market compared with other cities on the mainland. But for China Mobile, it represents a more advanced market for telecommunications services."

China Mobile Hong Kong, the mainland company's local operating unit, last year became the second service provider in the city to launch high-speed 4G services, after CSL. It offers local 3G services by leasing network capacity from both CSL and PCCW's HKT.

Government data shows that Hong Kong had 9.4 million 3G and 4G customers at the end of last year, when the city's mobile penetration rate reached 228.6 per cent.

"There are many high-end smartphone users in Hong Kong, which makes it ideal for China Mobile as a world-class … site for 4G services," Koo said.

But there has been strong resistance to the government's plan. SmarTone Telecommunications, CSL, Hutchison Telecommunications Hong Kong and HKT have called on the government to follow international practice by renewing their 3G spectrum allocations in the 1.9 gigahertz to 2.2GHz band, allocations that are due to expire in October 2016. The spectrum re-assignment is under public consultation, which closes on April 11.

The four operators warned that the government's plan would cause severe degradation in mobile services, including dropped calls and low data rates at peak hours. The higher investment costs to maintain service quality would be passed on to consumers.

They also called for the expedited release of new spectrum to avoid redistributing spectrum already in use. Their 3G spectrum provides vital support for 4G data traffic and can be redeployed as 4G to accommodate future growth.